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Gold fell $31.20/oz or 1.8%
in New York yesterday and closed below the $1,700/oz
level at $1,674.10/oz. Gold has traded in a range between $1,670/oz and $1,680/oz in Asia and
early European trading and is now trading at $1,677.40/oz.

Support is at the 200-day moving average at $1,677/oz and below that between $1,650/oz
and $1,660/oz. A more severe sell off could see gold fall to $1,600/oz and then to $1,500/oz but
this is unlikely given continuing strong demand especially from Asia.

Volume yesterday in most active April futures topped
237,000 lots, making Tuesday the third highest day in terms of turnover in a
month. This compares with Feb. 29's 343,493 lots of volume, the largest for
one day of trade since Sept. 23 2011.

Asian shares fell for the third day in a row on
Wednesday as investors grew more risk-averse, with renewed uncertainty over
Greece's bailout and mounting worries about slowing global economies
overshadowing support provided by ample liquidity. European shares have eked
out gains in early trading.

German lawmakers are to review Bundesbank
controls of and management of Germany’s gold reserves.
Parliament’s Budget Committee will assess how the central bank manages
its inventory of Germany’s gold bullion bars that are believed to be
stored in Frankfurt, Paris, London and the Federal Reserve Bank of New York,
according to German newspaper Bild.

CDU foreign policy expert Philip Missfelder
(left) and Ralf Schuler BILD reporters in front of the Federal Reserve Bank
of New York

The German Federal Audit Office has criticised
the Bundesbank’s lax auditing and inventory
controls regarding Germany’s sizeable gold reserves – 3,396.3 tonnes of gold or some 73.7% of Germany’s national
foreign exchange reserves.

There is increasing nervousness amongst the German
public, German politicians and indeed the Bundesbank
itself regarding the gigantic risk on the balance sheet of Germany's central
bank and this is leading some in Germany to voice concerns about the location
and exact amount of Germany’s gold reserves.

The eurozone's central bank
system is massively imbalanced after the ECB’s balance sheet surged to
a record 3.02 trillion euros ($3.96 trillion) last week, 31% bigger than the
German economy, after a second tranche of three-year loans.

The concern is that were the eurozone
to collapse, Bundesbank's losses could be half a
trillion euros - more than one-and-a-half times the size of the Germany's
annual budget.

In that scenario, Germany’s national patrimony of
gold bullion reserves would be needed to support the currency – whether
that be a new euro or a return to the Deutsche mark.

The German lawmakers are following in the footsteps of
US Presidential candidate Ron Paul who has long called for an audit of the
US’ gold reserves.

It is believed that some 60% of Germany’s gold is
stored outside of Germany and much of it in the Federal Reserve Bank of New
York.

Germany and other central banks may follow in Hugo
Chavez’s footsteps and repatriate their gold to Germany so as to have
direct possession of and ownership of their gold reserves in order to be
better prepared for a systemic or monetary crisis.

Jim Rickards has outlined
possible plans by the Federal Reserve to commandeer Germany’s and all
foreign depositors of sovereign gold at the New York Federal Reserve in the
event of a dollar and monetary crisis leading to intensified “currency
wars” and the ‘nuclear option’ of a drastic upward revision
of the price of gold and a return to a quasi gold
standard is contemplated by embattled central banks to prevent debt
deflation.

OTHER NEWS

(Reuters Global Gold Forum) -- Gold holdings are at a fresh
record of 70.795M oz, having risen by a net 27.24K oz overnight following inflows into COMEX Gold Trust,
while silver holdings are down 1.36M oz following
an outflow from iShares. Total silver holdings are
at their highest in 10 months, having risen by more than a net 6M oz in the last month, although almost all of this is
thanks to inflows into iShares, which have risen by
5.9M oz in this time.

March 6 (Bloomberg) -- The European Central
Bank’s balance sheet surged to a record 3.02 trillion euros ($3.96
trillion) last week, 31 percent bigger than the German economy, after a
second tranche of three-year loans.

(Bloomberg) -- Gold Fields Production Stopped by Cosatu Strike in South Africa

Gold Fields Ltd., the world’s fourth-largest
producer of the metal, had production stopped at its South African operations
by a one-day strike by the Congress of South African Trade Unions over road
toll fees and labor- broking.

“Attendance at our mines for the morning shift is
around 15 percent,” Gold Fields said in an e-mailed response to a query
today. “Effectively our staffing is therefore limited to essential
services.”

Volkswagen AG, General Motors Co. and Gold Fields Ltd.
halted production in South Africa as workers went on a one-day strike to
force the government to scrap short-term work contracts and highway tolls.

About 15 percent of workers arrived for the morning
shift at mines run by Gold Fields, the world’s fourth-largest producer of
the metal, the Johannesburg-based company said in an e-mailed statement
today. Volkswagen, GM, Ford Motor Co. and Daimler AG shut their local plants,
according to the companies.

The Congress of South Africa Trade Unions, an ally of
the ruling African National Congress, is pushing President Jacob Zuma to ban labor brokers that arrange short-term
contracts and curb costs as inflation erodes wage gains. The nationwide
strike may shut down 30 percent to 40 percent of Africa’s biggest
economy, according to Mike Schussler, chief
economist at Economists.co.za, a Johannesburg-based advisory service.

“It’s all systems go for the biggest mass
protest in years,” Cosatu’s spokesman,
Patrick Craven, said in the e- mailed statement today.

Workers began gathering in various cities around the
country to start 32 planned protest marches, Cosatu,
the nation’s largest labor federation representing about 2 million
workers, said in an e-mail. Protesters are due to march to the Chamber of
Mines in Johannesburg and to Parliament in Cape Town. The nation’s
biggest mining, manufacturing and transportation unions have backed the
one-day protest.

For breaking news and commentary on financial markets
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Mark O'Byrne is executive and research director of www.GoldCore.com which he founded in 2003.
GoldCore have become one of the leading gold brokers in the world and have over 4,000 clients in over 40 countries and with over $200 million in assets under management and storage.We offer mass affluent, HNW, UHNW and institutional investors including family offices, gold, silver, platinum and palladium bullion in London, Zurich, Singapore, Hong Kong, Dubai and Perth.